Unit costs in residential construction refer to the cost for each individual unit of a deliverable (e.g., 1 hour of labor, 1 sq foot of materials, etc.) needed within a task or project. This single unit cost can include both direct and indirect expenses associated with each unit delivered; such as supplies, overhead costs, taxes, and markup. The aggregate sum of all these expenses makes up the total estimated unit cost of any given deliverable.

Unit costs allow contractors to more accurately estimate the total cost of project labor and materials as well manage actual costs against their budgets accordingly. Furthermore, knowing these accurate unit costs gives contractors greater clarity around their pricing strategies and can help them negotiate better terms for future projects.